1、IS YOUR SUPPLY CHAINCOMPETITIVE?HOW DO YOU KNOW?OBJECTIVES AND OUTLINEOBJECTIVE:TO HELP YOU DETERMINEIF YOURCOMPANY HAS A COMPETITIVE SUPPLY CHAIN.OUTLINE:u ELEMENTS OF A SUPPLY CHAINu SCOR MODEL AND METRICSu BENCHMARKINGu IMPLICATIONSBEST PRACTICESuu INFORMATION SOURCESDEFINITION OF A SUPPLY CHAINu

2、 A SUPPLY CHAIN COVERS THE FLOW OF MATERIALS, INFORMATION AND CASH ACROSS THE ENTIRE ENTERPRISEu SUPPLY CHAIN MANAGEMENT IS THE INTEGRATED PROCESS OF PLANNING, SOURCING, MAKING AND DELIVERING PRODUCT, FROM RAW MATERIAL TO END CUSTOMERELEMENTS -SUPPLY CHAIN MANAGEMENT PLAN-SOURCE-MAKE-DELIVER-MEASURE

3、SUPPLY CHAIN INFRASTRUCTURE TRANSFER OF INFORMATION, MATERIALS AND CASHDEMAND MANAGEMENTCUSTOMER ORDER MANAGEMENT PROCESS FORECASTINGCUSTOMER PARTNERSHIPSSOURCINGSELECTING, QUALIFYING, PARTNERING, MEASURING AND PROVIDING FEEDBACK TO KEY SUPPLIERSELEMENTS OF SUPPLY CHAIN MANAGEMENT PLAN-SOURCE-MAKE-D

4、ELIVERu SUPPLY OR MANUFACTURING PROCESSFACTORY SCHEDULINGINVENTORY MANAGEMENTLEAD TIME REDUCTIONu LOGISTICAL PROCESSTRANSPORTATION, WAREHOUSING, DISTRIBUTION, DELIVERYu GLOBAL PERFOMANCE MEASUREMENTS - SCORSUPPLY CHAIN COUNCIL (SCC)u SCC IS AN INTERNATIONAL PROFESSIONAL BODY FOR SUPPLY CHAIN MANAGEM

5、ENT (SCM) SYSTEMS AND PRACTICESu DEVELOPED AND ENDORSED THE SCOR (SUPPLY CHAIN OPERATIONS REFERENCE MODEL) AS A CROSS INDUSTRY STANDARD FOR SCMSPECIAL INDUSTRY GROUPSAEROSPACE AND DEFENCECOMPUTERS & ELECTRONICS EQUIPMENTPHARMACEUTICALS & CHEMICALSUTILITIES - TELECOMMUNICATIONSRETAIL - CONSUMER PACKA

6、GED GOODSDEFENSE AND INDUSTRIALSEMICONDUCTORSSCOR MODELu BUSINESS PROCESS REENINEERINGAS IS TO TO BEu METRICSu BENCHMARKINGu IMPLICATIONSu BEST PRACTICE ANALYSISu PROCESS REFERENCE MODELBASED ON BEST IN CLASS RESULTSCHARACTERIZE MANAGEMENT PRACTICESIDENTIFY SOFTWARE SOLUTIONSLEVEL I METRICSu DELIVER

7、Y PERFORMANCEu PERFECT ORDER FULFILLMENTu PRODUCTION FLEXIBILITYu TOTAL SUPPLY CHAIN MANAGEMENT COSTu MATERIAL ACQUISITION COSTu CASH TO CASH CYCLE TIMEu TOTAL INVENTORY DAYS OF SUPPLYu ASSET TURNSLEVEL I METRICSu DELIVERY PERFORMANCE - % THE PERCENTAGE OF ORDERS THAT ARE FULFILLED ON OR BEFORE THE

8、CUSTOMERS REQUESTED DATELEVEL I METRICSu PERFECT ORDER FULFILLMENT - %DELIVERED COMPLETE WITH ALL ITEMS ON THE ORDER IN THE QUANTITY REQUESTEDDELIVERED ON TIME TO CUSTOMERS REQUEST DATEDELIVERED IN PERFECT CONDITION WITH THE CORRECT CONFIGURATION AND COMPLETE & ACCURATE DOCUMENTATIONLEVEL I METRICSu

9、 PRODUCTION FLEXIBILITY - DAYSTHE NUMBER OF DAYS REQUIRED TO ACHIEVE AN UNPLANNED, SUSTAINABLE 20% INCREASE IN PRODUCTIONLEVEL I METRICSu TOTAL SUPPLY CHAIN MANAGEMENT COST - $sSUM OF COSTS OF:ORDER MANAGEMENTMATERIALS ACQUISITIONINVENTORY CARRYINGSUPPLY CHAIN -FINANCE, PLANNINGAND MISLEVEL I METRIC

10、Su MATERIAL ACQUISITION COST - $sSUM OF COSTS TO MANAGE:COMMODITY MANAGEMENT & PLANNINGSUPPLIER QUALITY ENGG. INBOUND FREIGHT & DUTIESRECEIVING AND MATERIAL STORAGE INCOMING INSPECTIONMATERIAL PROCESS ENGG. & TOOLINGLEVEL I METRICSu CASH TO CASH CYCLE TIME - DAYSTHE NUMBER OF DAYS BETWEEN PAYING FOR

11、 RAW MATERIALS AND GETTING PAID FOR PRODUCT, AS CALCULATED BY:INVENTORY DAYS OF SUPPLYPLUSDAYS OF SALES OUTSTANDING (RECEIVABLES)MINUS AVERAGE PAYMENT PERIOD FOR MATERIAL (PAYABLES)C to CC TIME = INV DAYS + DAYS REC DAYS PAYLEVEL I METRICSu TOTAL INVENTORY DAYS OF SUPPLY(THE AVERAGE COST OF INVENTOR

12、Y DIVIDED BY THE COST OF GOODS SOLD) TIMES 365TOTAL INVENTORY DAYS SUPPLY=INVENTORYCOGSx 365LEVEL I METRICSu ASSET TURNS NUMBERTOTAL REVENUE DIVIDED BY TOTAL ASSETS= TOTAL REVENUETOTAL ASSETSBENCHMARKING AND BESTPRACTICESu DELIVERY PERFORMANCE TO REQUEST %(8/2000)BIC98.982.898.498.097.484.594.8AverM

13、edianPharmas and ChemicalComputersConsumer Packaged GoodsDefense and IndustrialElectronic EquipmentSemiconductorsTelecommunications78.456.472.369.467.662.063.491.958.884.471.774.264.872.6DELIVERY PERFORMANCE TO REQUEST %u RANGE 62% TO 98%( 20 to 30 % points per Industry Group)u IMPLICATIONSMOST FUND

14、AMENTAL MEASUREMENT OF CUSTOMER SATISFACTIONINDICATES HOW WELL THE SUPPLY CHAIN IS CONFIGURED & INTEGRATEDDELIVERY PERFORMANCE TO REQUEST %u BEST PRACTICESORDER TRACKING SYSTEMS TO COMPARE REQUESTED VS ACTUAL DATES AT LINE ITEM LEVELDEMAND VISIBILITY TO SUPPLIERSCONSOLIDATION, PACKING AND DELIVERY O

15、UTSOURCED.DELIVERY DIRECTLY TO CUSTOMER POINT OF USEON LINE ATP AND ORDER STATUS AVAIL TO CUSTOMERBENCHMARKING AND BESTPRACTICESu UPSIDE PRODUCTION FLEXIBILITY (8/2000)DAYSAver 229.353.4144.896.173.3188.541.7BIC 18.49.79.416.79.030.09.6Median 12038.560.036.060.0175.030.0Pharmas and ChemicalComputers

16、Consumer Packaged GoodsDefense and IndustrialElectronic EquipmentSemiconductorsTelecommunicationsUPSIDE PRODUCTION FLEXIBILITY Daysu RANGE 9 to 230 DAYS(6 to 10 times within Industry Group)u IMPLICATIONS MEASURE OF COMPANYS SUPPLY FLEXIBILIYINCREASE IN PRODUCTION WITHOUT CAPITAL INVESTMENTUPSIDE PRO

17、DUCTION FLEXIBILITY Daysu BEST PRACTICESEFFECTIVE SUPPLIER PARTNERSHIPSSYNCHRONIZING OPERATIONS ACROSS THE COMPANY TO REDUCE RAMP TIMEHIGH PERFORMANCE MANUFACTURING TECHNIQUES DEMAND PULL, CELLULAR MFG, MULTI SKILLED FORCEBUILD/CONFIGURE TO ORDER MODULAR DESIGNBENCHMARKING AND BEST PRACTICESu TOTAL

18、SUPPLY CHAIN MANAGEMENT COSTS (8/2000)%OF REVENUEBIC 5.04.3Aver 10.39.411.39.411.4Median 11.28.49.18.911.4Pharmas and ChemicalComputersConsumer Package Goods 4.1Defense and IndustrialElectronic EquipmentSemiconductorsTelecommunications3.25.13.78.68.2TOTAL SUPPLY CHAIN MANAGEMENTCOSTS % OF REVENUEu R

19、ANGE 3 to 11%( double within Industry Groups)u IMPLICATIONS 1 BILLION DOLLAR COMPANY WILL SAVE$50 million (5%) PER YEAR, IN SUPPLY CHAIN MANAGEMENT COSTS, OVER THEIR COMPETITIONTOTAL SUPPLY CHAIN MANAGEMENTCOSTS % OF REVENUEu BEST PRACTICESSCM VIEWED AS CRITICAL PROCESS AND INTEGRATED INTO BUSINESS

20、PLANNING PROCESSSINGLE EXECUTIVE OVERALL RESPONSIBILITYON LINE EDI AND PURCHASINGPAY ON RECEIPT (ELIMINATE RECONCILIATION OF INVOICES)BENCHMARKING AND BEST PRACTICESu MATERIAL ACQUISITION COST 1996% OF REVENUEBIC 0.51.0AverMedian 1.31.71.72.61.31.93.5Pharmas and ChemicalComputers & ElectronicsConsum

21、er Package Goods 1.1Defense and IndustrialSemiconductorsTelecommunicationsAutomotive1.00.51.01.8MATERIAL ACQUISITION COST% OF REVENUEu RANGE 0.4 to 3.5%(double across industry groups)u IMPLICATION A 1 BILLION $ CO. SAVES $10 MILLION (1%) PER YEAR IN MATERIAL BUYING COSTS PURCHASING, QUALITY AND DEVE

22、LOPMENTMATERIAL ACQUISITION COST% OF REVENUEu BEST PRACTICES SUPPLIER PARTNERSHIPSKEY SUPPLIERS ON PRODUCT DEVELOPMENT TEAMSCERTIFIED SUPPLIERS DELIVER AT POINT OF USECOMMODITY TEAMS FOCUS ON STRATEGIC PROCUREMENT ISSUESBENCHMARKING AND BESTPRACTICESu CASHtoCASH CYCLE TIME(8/2000)DAYSBIC 31.327.5Ave

23、r 120.262.177.070.3116.3110.390.5Median 96.851.563.667.1103.1104.585.8Pharmas and ChemicalComputersConsumer Package Goods 19.9Defense and IndustrialElectronic EquipmentSemiconductorsTelecommunications20.831.649.419.4CASHtoCASH CYCLE TIME - DAYSu RANGE 20 to 120 days( 2 to 4 times within Industry Gro

24、ups)u IMPLICATIONS 50% TO 75% OF WORKING CAPITAL BECOMES AVAILABLE TO COMPANIES TO INVESTCASHtoCASH CYCLE TIME - DAYSu BEST PRACTICESCASH-RELEASE AGREEMENT FOR BLANKET ORDERSTHIRD PARTY RECONCILIATION AND PAYMENT OF RECEIVABLESABILITY TO MAINTAIN LOWER INVENTORY LEVELSBENCHMARKING AND BESTPRACTICESu

25、 INVENTORY DAYS OF SUPPLY (BIC&Median96,Av.98)DAYSAver 12054387280BIC 1023731Median 1606076Pharmas and ChemicalChemicalComputersConsumer Packaged GoodsDefense and IndustrialElectronic EquipmentSemiconductorsTelecommunications553149508577769580INVENTORY DAYS OF SUPPLY - DAYSu RANGE 20 to 120 days(3 to 4 times within Industry Groups)u IMPLICATIONS FOR A 1 BILLION $ CO., WITH COGS OF 500 MILLION, DIFFERENCE OF 50 DAYS IS $100 MILLION!SUPPLIERS SELECTED ON TOTAL COST OF OWNERSHIP (TCO),NOT JUST PURCHASE PRICEINVENTORY DAYS OF SUPPLY - DAYSu BEST PRACTICESAUTO REPLENISHMENT Ex. VMIVISIBILITY OF D